Experts say India lacks innovative startups despite rise in VC deals

What will it take to create a disruptive startup from India? Something like ride aggregator Uber or homesharing platform Airbnb? Even after a record number of venture capital deals in India’s startup ecosystem, few disruptive startups have come out of the country.

According to experts, a confluence of conditions must be in place before radical innovation can be born. It takes a little more than a market, a payment module, guts and DNA. While entrepreneurs must be audacious enough to conceive and develop a full-stack product that would take care of the end to-end customer experience, experts say factors such as market conditions, risk-taking investors and a good team also come into play in order to cause true disruption.

“For value to be created, different parts of the value chain have to be connected. So you have to convince the dominant player in the value chain to cascade all the way down with orchestrated changes. Startups have to build vertically integrated models,” said Sharad Sharma, cofounder of software product think tank iSPIRT (Indian Software Product Industry Round Table).

But the Chinese proverb that success depends on a felicitous combination of timing, resources and people also holds true in the startup world – and not just the simple formula of “quality team and leadership”. Marc Andreessen, one of the most influential venture capitalists in Silicon Valley, emphasises that over a period of time, the market is the most important factor in a startup’s failure or success, said Varun Bhalla, investment associate at Khosla Impact and former head of the IIT Bombay Entrepreneurship Cell.

“So essentially, if the market is not large enough or does not exist, even a great team will not be able to pull it off, no matter how disruptive the product is,” said Bhalla. While billion-dollar startups have come out of India, most businesses are based on the catering-for-India model, encouraged by investors bullish on replicating successes in the US, China or Europe in the local market.

This story was originally published on The Economic Times.